I don't have a Pi but I am developing a Linux/ARM system and I find the Ethernet to be an invaluable debugging port. How does one access the console or download code without an Ethernet port on the Model A? I assume there is a serial port for tty support.
IMO, stripping out Ethernet eliminates one of the most awesome things about using Linux in an embedded application: Rich networking support. But I can see how if you were using Python that this might still be useful. Otherwise, I would think that an Arduino board might be a better choice given that it is real time and lower power and still comes with a massive base of support.

@Duane, I think the program has been very successful. Many of my friends ordered the kit and are developing very interesting applications using this device. I am glad it released low-power version as-well which will help the developers because they dont have to worry about powering this.

have been using it to teach 6th and 8th (5 kids) graders basic python programming. it has good community support with plenty of programming examples. combine it with a few ebay relay boards, switches or stepper mottor drivers and it can be used to teach a bunch of stuff to kids.
having volenteered in schools, elementry, middle and high school over the past 20 years (lego robotics, BEST ...) i have found few teacher that would be able to make use of something like raspberry pi unless they are handed a structured curriculum with all materials. with a few mentor, i think it can work. it not an issue finding teacher wanting to provide this type of education but they need help.

This is a good modification. There are probably a lot of applications for which low-power is more important than the extra features.
The Raspberry Pi was originally intended primarily for educational use as a low cost way to give student programming experience. Does anyone know how successful that part of the program has been? I know quite a lot have been sold, but how many are to educational institutions and how many of those are in use with working curriculum?